In Jonathan Paul Padbury v The Welsh Revenue Authority [2025] TC09470, the First Tier Tribunal (FTT) found that a taxpayer was not entitled to a refund of the higher rate of Land Transaction Tax (LTT). The impact of Coronavirus, which had delayed the sale of the taxpayer's previous primary residence, could not be considered.
On 28 November 2019, Mr Padbury purchased a residential property in Wales.
- At the time, Mr Padbury owned another residential property in Worcester, England.
- This meant that the purchase of the Welsh property was a ‘higher rate residential property transaction’, subject to higher rates of Land Transaction Tax (LTT).
- Mr Padbury intended to sell the Worcester property and move to the Welsh property. The sale of the Worcester property did not complete until 4 January 2023, having been delayed by:
- Coronavirus lockdowns, preventing the effective marketing of the property.
- Mr Padbury being furloughed and subsequently being made redundant.
- The buyer of the Worcester property needing an environmental report to complete the sale of their property. This took six months to get because of a backlog of reports due to Coronavirus.
- On 21 February 2023, Mr Padbury claimed a refund of the Higher rate of LTT paid on the Welsh property on the grounds that he had sold his previous main residence in England and, therefore, the Welsh property had ceased to be subject to higher rates of LTT.
- Following an enquiry, the Welsh Revenue Authority (WRA) issued a closure notice rejecting Mr Padbury’s claim on the basis that the conditions for the replacement of residence exception to the higher rates of LTT were not met.
- Mr Padbury had not sold his previous main residence within the three years beginning on the day after the effective date of his purchase of the Welsh property.
- Mr Padbury Appealed to the First Tier Tribunal (FTT).
The FTT found that:
- Mr Padbury’s purchase of the Welsh property could only qualify as a replacement for his only or main residence if the effective date of his sale of the Worcester property was within three years of his purchase of the Welsh property. It was not.
- Mr Padbury was incorrect to argue that the three-year period for him to sell his former residence should be treated as extended by the length of any periods during which he was, in effect, unable to market the Worcester property as a result of the Coronavirus Act 2020.
- The three-year period remained a fixed period that expired on 28 November 2022.
- The WRA did not have any discretion to allow a transaction to be treated as a replacement of a person’s only or main residence, such as where exceptional circumstances prevented that person from selling another property within three years.
The appeal was dismissed.
Editor’s comment
Legislation was passed in July 2024 extending the three-year period to claim refunds or exceptions in respect of the higher residential LTT rates in a number of situations. These include 'purchase before sale' scenarios where the sale of a former main residence is prevented by emergency restrictions.
This easement only applies to transactions on or after 12 July 2024, meaning it did not assist Mr Padbury in his appeal.
Useful guides on this topic
Welsh Land Transaction Tax (LTT)
What is Land Transaction Tax? How does it operate? What reliefs are available?
Welsh LTT vs SDLT: Comparing the rates and additional dwellings charge
How does Welsh Land Transaction Tax (LTT) compare to Stamp Duty Land Tax (SDLT)? What are the key similarities and differences?
Welsh LTT Rates
What are Welsh Land Transaction Tax (LTT) Rates? How do you calculate Welsh Land Transaction Tax?
Welsh Taxes: What's new 2025?
What’s new for Welsh taxes in 2024-25? What updates have occurred this year? What changes must be implemented for 2025/26?
External link
Jonathan Paul Padbury v The Welsh Revenue Authority [2025] TC09470
